IPP Financial Advisers has maintained its forecast that Malaysia’s economy will grow by 4.6% in 2026. The firm expects firm domestic demand, private investment and a gradual improvement in external trade to support expansion despite uncertainty in the global economy. Mohd Sedek Jantan, IPPFA’s director of investment strategy and country economist, said the country continues to benefit as multinational companies spread their manufacturing operations across Asia.

Malaysia’s established semiconductor industry, growing data-centre sector and investment in artificial intelligence infrastructure are expected to attract more high-value projects. Domestic consumption also remains a major source of stability, while investment is being supported by semiconductor expansion, digital infrastructure and national development programmes. IPPFA expects total trade to rise by about 11%, with the trade surplus recovering towards RM200 billion.

The firm forecasts average headline inflation of 2% in 2026, helped by stable demand, lower global commodity prices and controlled imported inflation. It also expects the unemployment rate to improve to 2.8% as manufacturing, construction and services create more jobs. Although IPPFA remains positive about the ringgit over the medium term, Mohd Sedek said maintaining a rate below RM4 against the US dollar could be difficult while US interest rates remain high.

IPPFA expects the FBM KLCI to end 2026 near 1,780 points, supported by corporate earnings, domestic spending and foreign direct investment. The firm identified artificial intelligence, strategic manufacturing, supply-chain diversification and resource security as important areas likely to guide investment over the coming years.